WASHINGTON, Oct. 11, 2017 - The Energy Information Administration (EIA) reports state taxes on gasoline this year average 27.9 cents per gallon, an increase of 4.5 percent over 2016. Fuel consumers pay this in addition to a federal tax of 18.4 cents per gallon, a rate which has not changed since 1993. The state diesel tax averages 28.6 cents per gallon with a federal tax of 24.4 cents per gallon.
Motor fuel taxes and fees originate at all levels of government to provide revenue for environmental protection and other dedicated funds. Most of the tax revenue contributes to building and maintaining transportation infrastructure.
Most of the tax increases over the past year occurred in states in the Northeast and Midwest. Through the first half of 2017, the spread between retail prices for regular gasoline in the Northeast and the U.S. average wholesale gasoline price averaged 68 cents per gallon, 3 cents per gallon higher than in the same period in 2016.
Tax increases in New Jersey were the highest, which were up by 23 cents per gallon. Price spreads between regular retail gasoline and regular wholesale gasoline in the Midwest increased by about 2 cents per gallon to reach an average of 61 cents per gallon.
In addition to already existing tax changes, EIA’s Short Term Energy Outlook (STEO) also accounts for future approved tax increases, such as California’s planned 12-cents-per-gallon increase set to begin on Nov. 1. California represents a major portion of West Coast gasoline consumption, so changes in California’s fuel taxes are expected to contribute to larger differences between West Coast retail and U.S. average wholesale gasoline prices in the STEO forecast.
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